The Swiss Franc surged to its highest level against the Euro in over 10 years on Monday, while the US Dollar climbed to a five-week peak, as investors moved into safe-haven assets following US and Israeli strikes on Iran, which heightened fears of a prolonged conflict.
In early Asian trading, the Swiss Franc rose 0.7% to its strongest level versus the Euro since 2015, reaching 0.9030, and gained as much as 0.4% against the Dollar to 0.7661.
Meanwhile, the Dollar index, which tracks the currency against six major peers, advanced up to 0.3% to 98.273, its highest level since 23rd January.
The strikes reportedly killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, triggering a tense and uncertain battle over succession, Reuters reports.
The violence continued into Monday as Iran retaliated. The Iranian Revolutionary Guard claimed it had targeted three US and British oil tankers, while explosions were reported in several countries across the region, including Israel, the UAE, Qatar, Bahrain, and Kuwait.
Oil prices were the primary concern for investors at the start of the week, surging around 9% early on Monday amid worries about disruptions to maritime trade.
Following an initial spike, the Yen fell 0.6% to 157 per Dollar as traders weighed the impact of higher energy costs on Japan’s oil imports and considered how the escalating conflict might influence the Bank of Japan’s monetary policy.
“We had already viewed the likelihood of an interest rate hike in March or April as low, but amid rising uncertainty stemming from developments of the situation in the Middle East, the BOJ is likely to adopt a more cautious stance, further reducing the probability of a near-term rate hike,” according to Morgan Stanley MUFG analysts.
In addition, the Norwegian Krone gained 0.7% against the US Dollar, while Canada’s currency, another major oil exporter, held steady.
Elsewhere, the Euro declined 0.8% to $1.172525 amid concerns about possible disruptions to Europe’s energy supply, and Sterling dropped 0.9% to $1.3372.
Furthermore, the Australian Dollar, which is sensitive to shifts in risk sentiment, fell by as much as 1.2% against the greenback, while the New Zealand Dollar declined up to 0.8%.